Increase of risk and good faith

In Forrest & Sons Ltd v CGU Insurance plc, 23 September 2005, unreported (forthcoming in [2006] Lloyd’s Rep IR) HHJ Kershaw QC in the Manchester District Registry Mercantile Court was faced with a claim under a fire policy, the insurers relying both on an increase of risk clause and breaches of the duty of utmost good faith. Although the outcome of the case, in favour of insurers, is seemingly the right one, various aspects of the reasoning are far from straightforward.